HORNGRENS COST ACCOUNTING W/ACCESS
16th Edition
ISBN: 9781323687604
Author: Datar
Publisher: PEARSON
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Textbook Question
Chapter 21, Problem 21.18MCQ
Which of the following statements is true if the
- a. The project’s
IRR is less than 5 percent. - b. The required rate of return is lower than the IRR.
- c. The NPV assumes
cash flows are reinvested at the IRR. - d. The NPV would be positive if the IRR was equal to 5 percent.
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Students have asked these similar questions
6.Calculate the project's Modified Internal Rate of Return (MIRR). What critical assumption does the MIRR make that differentiates it from the IRR?
TIP : look for the definition of Modified Internal Rate of Return, and then do it in excel, easy !!!
Year
Net Cash flow
Future Value of Net Cash flow
0
-$20.8
example
1
$4.5
$7.97 (n=6, i=10%)=fv(.1,6,,4.5)
2
$6.3
(n=5, i=10%)
3
$5.2
(n=4, i=10%)
4
$3.9
(n=3, i=10%)
5
$2.1
(n=2, i=10%)
6
$1.3
(n=1, i=10%)
7
$0.5
(n=0, i=10%)
Sum = $XX.XX
MIRR = ( in excel ) Rate ( 7,-20.8, xx.xx)
7.Where does the value of MIRR fall relative to the discount rate and IRR?
Which of the following statements is incorrect regarding project appraisal techniques?
At IRR, the NPV of a project is equal to 0
If the IRR of a project is 8%, its NPV calculated using a discount rate greater than 8%, will be less than 0
If the NPV of a project is greater than 0, then its PI will exceed 1.
If the PI of a project equals 0, then the project's initial cash outflow equals the PV of its cash inflows
please answer both questions correctly:
10.
A project has the following cash flows:
Year
Cash Flow
0
$ 43,500
1
−22,500
2
−33,500
a.
What is the IRR for this project? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
b.
What is the NPV of this project, if the required return is 12 percent? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
c.
What is the NPV of the project if the required return is 0 percent? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
d.
What is the NPV of the project if the required return is 24 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
11.
Anderson International Limited is…
Chapter 21 Solutions
HORNGRENS COST ACCOUNTING W/ACCESS
Ch. 21 - Capital budgeting has the same focus as accrual...Ch. 21 - List and briefly describe each of the five stages...Ch. 21 - Prob. 21.3QCh. 21 - Only quantitative outcomes are relevant in capital...Ch. 21 - How can sensitivity analysis be incorporated in...Ch. 21 - Prob. 21.6QCh. 21 - Describe the accrual accounting rate-of-return...Ch. 21 - Prob. 21.8QCh. 21 - Lets be more practical. DCF is not the gospel....Ch. 21 - All overhead costs are relevant in NPV analysis....
Ch. 21 - Prob. 21.11QCh. 21 - Distinguish different categories of cash flows to...Ch. 21 - Prob. 21.13QCh. 21 - How can capital budgeting tools assist in...Ch. 21 - Distinguish the nominal rate of return from the...Ch. 21 - A company should accept for investment all...Ch. 21 - Prob. 21.17MCQCh. 21 - Which of the following statements is true if the...Ch. 21 - Prob. 21.19MCQCh. 21 - Nicks Enterprises has purchased a new machine tool...Ch. 21 - Prob. 21.21ECh. 21 - Capital budgeting methods, no income taxes. Yummy...Ch. 21 - Capital budgeting methods, no income taxes. City...Ch. 21 - Prob. 21.24ECh. 21 - Capital budgeting with uneven cash flows, no...Ch. 21 - Comparison of projects, no income taxes. (CMA,...Ch. 21 - Payback and NPV methods, no income taxes. (CMA,...Ch. 21 - DCF, accrual accounting rate of return, working...Ch. 21 - Prob. 21.29ECh. 21 - Prob. 21.30ECh. 21 - Project choice, taxes. Klein Dermatology is...Ch. 21 - Prob. 21.32ECh. 21 - Selling a plant, income taxes. (CMA, adapted) The...Ch. 21 - Prob. 21.36PCh. 21 - NPV and AARR, goal-congruence issues. Liam...Ch. 21 - Payback methods, even and uneven cash flows. Sage...Ch. 21 - Replacement of a machine, income taxes,...Ch. 21 - Recognizing cash flows for capital investment...Ch. 21 - NPV, inflation and taxes. Fancy Foods is...Ch. 21 - NPV of information system, income taxes. Saina...
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Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
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